COMMITMENTS AND CONTINGENCIES

Firm Transportation, Processing and Sales Agreements. We enter into contracts that provide firm transportation, sales and processing charges on pipeline systems through which we transport or sell natural gas. Satisfaction of the volume requirements includes volumes produced by us, volumes purchased from third parties and volumes produced by PDCM, our affiliated partnerships and other third-party working interest owners. We record in our financial statements only our share of costs based upon our working interest in the wells. These contracts require us to pay these transportation and processing charges whether the required volumes are delivered or not. With the exception of contracts entered into by PDCM, the costs of any volume shortfalls are borne by PDC.

The following table presents gross volume information, including our proportionate share of PDCM, related to our long-term firm transportation, sales and processing agreements for pipeline capacity:



	Year Ending December 31,
Area	2014		2015		2016		2017		2018 and Through Expiration		Total		Expiration Date

Volume (MMcf)
Appalachia-Marcellus Shale	18,212		19,485		21,044		20,987		125,336		205,064		January 31, 2026
Utica Shale	2,454		2,738		2,745		2,737		15,285		25,959		July 22, 2023
Total	20,666		22,223		23,789		23,724		140,621		231,023

Dollar commitment (in thousands)	$	7,547	$	7,907	$	8,230	$	7,790	$	38,526	$	70,000

In March 2013, we entered into long-term agreements with a subsidiary of MarkWest Energy Partners, LP to provide midstream services, including gas gathering, processing, fractionation and marketing, to support our northern Utica Shale operations. The primary term of the agreements commenced in July 2013 when our natural gas began to flow into the gathering system. The gas processing agreement includes minimum volume commitments as shown in the table above, with certain fees assessed for any shortfall.

Litigation. The Company is involved in various legal proceedings that it considers normal to its business. The Company reviews the status of these proceedings on an ongoing basis and, from time to time, may settle or otherwise resolve these matters on terms and conditions that management believes are in the best interests of the Company. There is no assurance that settlements can be reached on acceptable terms or that adverse judgments, if any, in the remaining litigation will not exceed the amounts reserved. Although the results cannot be known with certainty, we currently believe that the ultimate results of such proceedings will not have a material adverse effect on our financial position, results of operations or liquidity.

Alleged Class Action Regarding 2010 and 2011 Partnership Purchases

In December 2011, the Company and its wholly-owned merger subsidiary were served with an alleged class action on behalf of certain former partnership unit holders, related to its partnership repurchases completed by mergers in 2010 and 2011. The action was filed in U.S. District Court for the Central District of California and is titled Schulein v. Petroleum Development Corp. The complaint primarily alleges that the disclosures in the proxy statements issued in connection with the mergers were inadequate, and a state law breach of fiduciary duty. In June 2012, the Court denied the Company's motion to dismiss. In January 2014, the plaintiffs were conditionally certified as a class by the court. Jury trial is scheduled for May 2014. We have not recorded a liability for claims pending because we believe we have good legal defenses to the asserted claims and it is not possible for management to reasonably estimate monetary damages resulting from this claim.

Environmental. Due to the nature of the natural gas and oil industry, we are exposed to environmental risks. We have various policies and procedures to avoid environmental contamination and mitigate the risks from environmental contamination. We conduct periodic reviews to identify changes in our environmental risk profile. Liabilities are recorded when environmental damages resulting from past events are probable and the costs can be reasonably estimated. As of December 31, 2013 and December 31, 2012, we had accrued environmental liabilities in the amount of $5.4 million and $8.4 million, respectively, included in other accrued expenses on the consolidated balance sheet. We are not aware of any environmental claims existing as of December 31, 2013 which have not been provided for or would otherwise have a material impact on our financial statements. However, there can be no assurance that current regulatory requirements will not change or unknown past non-compliance with environmental laws will not be discovered on our properties.

Lease Agreements. We entered into operating leases, principally for the leasing of natural gas compressors, office space and general office equipment.

The following table presents the minimum future lease payments under the non-cancelable operating leases as of December 31, 2013:



	Year Ending December 31,
	2014		2015		2016		2017		2018		Thereafter		Total
	(in thousands)

Minimum Lease Payments	$	2,427	$	1,970	$	471	$	257	$	34	$	941	$	6,100

Operating lease expense for the years ended 2013, 2012 and 2011 was $7 million, $6.1 million and $5.9 million, respectively.

Employment Agreements with Executive Officers. Each of our senior executive officers may be entitled to a severance payment and certain other benefits upon the termination of the officer's employment pursuant to the officer's employment agreement and/or the Company's executive severance compensation plan. The nature and amount of such benefits would vary based upon, among other things, whether the termination followed a change of control of the Company.

See Note 16, Transactions With Affiliates, for a discussion related to the separation agreement entered into with our former chief executive officer in 2011.